What’s the Difference between Entrepreneurship and Innovation?

You can’t lift up any piece of news or commentary these days without seeing a discussion or article about entrepreneurship and innovation and how to improve one, the other or both. Prescriptions abound. But my question is: are entrepreneurship and innovation the same thing or are they different? I ask that because you usually see them come in twos and I am not at all convinced that this is really the case.

Just to start off I want to make my biases clear. I have a very definite view of what constitutes innovation. In my view it’s something really different from anything that came before it. I distinguish between strong and weak innovation. Strong innovation is something totally new. Weak innovation is something that already exists that you have improved somewhat.

You don’t have to have actually invented it to be an innovator; just like Steve Jobs with the graphical user interface or Bill Gates with DOS. You could have seen the idea somewhere or bought it from someone else. But you ran with something that was very different because you saw an unusual opportunity even if you didn’t invent the product.

One way or the other I have been involved with many entrepreneurial endeavors. And I have also been involved with innovators. From observation what I see is that most entrepreneurs are not innovators and that most innovators are not entrepreneurial.

For a start, let’s take entrepreneurs. In my observation the vast majority are taking an existing idea that is already around and then modifying it in some ways, in most cases only a little. So either the idea is not new at all (a new theme restaurant for example or it’s a weak innovation (a niche type of social network perhaps).

And let’s take innovators. I have seen quite a few of them. In fact my company has actually developed an assessment to identify them.

What I have observed is that most innovators are introverts. Most of them are certainly independent-minded but not good at dealing with people and therefore hesitant to do anything entrepreneurial even if they would like to because of their level of independent-mindedness.

So these innovators, even if they would like to be entrepreneurial, usually don’t become entrepreneurs. They might become intrapreneurs so they can depend on a corporate sugar daddy to keep food in the fridge, but that’s a whole lot different from going it alone outside the cozy big company cocoon.

So why does this matter? I have also been a professor of entrepreneurship and I have seen many students of entrepreneurship confuse the two because so often teaching of entrepreneurship conflates the both. When you don’t know yourself, as is the case with all of us when we are young, it’s easy to confuse being entrepreneurial with being an innovator.

So I have also seen many young people start companies under the impression that their presumed innovativeness would give them that winning edge, only to find out later they were universes away from ever achieving it.

I think this problem is exacerbated by the “self-esteem” movement that teaches that kids should always be praised and never criticized. I think many kids grow up not realizing their limitations because of this type of upbringing and so believing that they are almost certain to be a successful and innovative entrepreneur.

Of course we want our kids to be entrepreneurial and to take risks but we also want them to have a healthy level of self-awareness that has some realistic basis. Unfortunately this isn’t always true and can have devastating psychological consequences for kids who drink liberally of the Kool-Aid.

And I don’t think this issue just ends with kids. I think that many large companies have management teams and CEOs that also confuse the two.

Although the atmosphere of many large companies stifles innovation, all too often the companies themselves are not aware of this. Since most people who spend their career in a large company have never actually worked in either an entrepreneurial or innovative company, it’s easy for many to erroneously believe that they are being entrepreneurial or innovative when in fact they are just following the crowd, but with a small twist.

I think this contributes to the already extant tendency in these companies to not being either entrepreneurial or innovative. Although I am maybe being snarky, it’s also like being a professor of entrepreneurship when you have never been an entrepreneur, but only ever a wage slave.

By all means be an entrepreneur but if you aren’t one, don’t confuse this with being an innovator. If people held to this principle they would probably do less foolish things when they start a company and get to be a whole lot more successful in doing it, even if less exciting.

About the author

Dr. E. Ted Prince is CEO and Founder of the Perth Leadership Institute, which has developed unique leadership assessments for financial leadership and business acumen. He is the author of The Three Financial Styles of Very Successful Leaders, published by McGraw Hill in 2005 and since published in China, India and Taiwan and Business Personality and Leadership Success: Using the Leadership Cockpit to Improve Your Career and Company Outcome published by Amazon Kindle in 2011. He has numerous publications in the area of leadership, management, human resources, business strategy and technology and is a frequent speaker at industry conferences. He has held the positions of Visiting Lecturer at the University of Florida and Visiting Professor at the Shanghai University of Finance and Economics.
Dr. Prince has been CEO of several companies in the technology area over a period of 20 years including Chairman and CEO of a public company for 6 years. He has also been on the boards of numerous other companies including several public companies.
Dr. Prince holds a BA First Class Honors degree in languages and political science from the University of New South Wales in Sydney, Australia, and MA and Ph.D., degrees in political science from Monash University in Melbourne, Australia.